Act now to avert new great depression, economist Duncan says

July 18, 2012|Reuters

Continuing along the current path of deficit spending toprop up consumption is a better policy but is not the answereither. It might buy another five to 10 years but ultimatelygovernments would end up as insolvent as Greece is now, he said.

Instead, he advocates vast government spending in frontierfields such as solar power, genetic engineering andnanotechnology that he says would pay for itself many timesover, eventually allowing Washington to balance its books andreduce the national debt.

"They can continue borrowing, but just invest the money intransformative 21st century technologies that actually createmassive investment returns," he said.

Duncan anticipates the objection that his proposal is apolitical non-starter.

"People tell me 'you must be insane'," he acknowledged. Heretorts by citing the success of the Manhattan Project in WorldWar Two when the U.S. government gathered the best scientistsand gave them unlimited funds to develop the atomic bomb.

Carpeting the Nevada desert with solar panels to createunlimited cheap energy would be to display the same pioneeringspirit, Duncan said.

"We can take advantage of this opportunity and borrow andinvest at 1.5 percent interest or we can collapse into adepression. Those are our options. Be imaginative and brave orfail because of our past mistakes," he said.